Do foreign banks have any control over their destiny in China? Certainly those with small stakes in the "big four" state-owned banks never expected much, being happy just to have a seat at the table.
But HSBC's lauded strategy of owning 19.9 per cent of the smaller Bank of Communications was meant to have given it a chance of eventually sitting in - or at least near - the high chair. Indeed, as part of the purchase agreement in 2004, HSBC is allowed to increase its stake in BoCom to 40 per cent if China ever raises its foreign investment limits.
This could still be a long way off. Worse, on Thursday, BoCom released its prospectus for a capital raising via an initial public offering in Shanghai. The IPO is expected to raise about $3.4bn, versus BoCom's current market capitalisation on the Hong Kong stock exchange of $50bn. As a foreign company, HSBC cannot participate and its holding would be diluted down to 18.6 per cent.
HSBC seems to have played a peripheral role in the IPO despite having two seats on BoCom's board. It is now furiously lobbying the regulator in order to maintain its stake. Naturally, HSBC says it backed the plan as it broadens the shareholder base and, to be fair, it probably makes sense to take advantage of the ludicrous valuations on the Shanghai market. Nevertheless, HSBC's objective of increasing control of BoCom appears to be slipping.
Luckily, HSBC has a number of routes into the Chinese market, unlike many of its competitors. It has stakes in a local asset manager and an insurer as well as controlling Hang Seng Bank. It is also aggressively expanding its own branch network. A scattergun approach may yet prove the best strategy for the ever-changing Chinese landscape - of many destinies, one might hit home.